Mary KOBZOFF et al., Plaintiffs and Appellants, v. LOS ANGELES COUNTY HARBOR/UCLA MEDICAL CENTER et al., Defendants and Respondents.
Plaintiffs Mary Kobzoff, the Estate of David Peter Kobzoff, and their attorneys, Devirian, Utley & Detrick, appeal the trial court's order awarding defendant County of Los Angeles (the “County”) its defense costs pursuant to Code of Civil Procedure section 1038, following the County's successful motion for summary judgment in plaintiffs' wrongful death lawsuit. For the reasons explained herein, we affirm the judgment, but reverse the award of costs.
On October 31, 1993, David Peter Kobzoff was rescued from a cliff by emergency personnel who prevented him from jumping. He was taken to Los Angeles County/Harbor UCLA Medical Center, operated by the County, and placed on a 72-hour hold pursuant to Welfare & Institutions Code section 5150. Arriving despondent and suicidal, Kobzoff was locked in seclusion at 1 p.m. At 2:30 p.m., he was told that he could go to the bathroom. The bathroom was neither secure nor supervised. Kobzoff escaped from the bathroom, left the hospital, dove in front of a truck, was struck and died of his injuries.
Kobzoff's heirs filed suit against the County, alleging causes of action for medical malpractice and lack of informed consent. The County answered, asserting its immunity under Government Code 1 sections 856.2 and 855.8, the escaping mental patient and mental treatment immunities.
The County moved for summary judgment based on its statutory immunity under sections 856.2 and 855.8. The County also filed a motion requesting attorneys fees as costs pursuant to Code of Civil Procedure section 1038, on the ground that plaintiffs had not filed or pursued their action with reasonable cause. Plaintiffs vigorously opposed both motions. The trial court granted the summary judgment motion. In addition, the court ruled that, in light of the immunity provided by statute and the cases interpreting those statutes, plaintiffs lacked reasonable cause to maintain the lawsuit.2 Accordingly, the trial court granted the County's motion for defense costs.
On appeal, plaintiffs do not challenge the summary judgment. Rather, the sole issue on appeal is whether costs were properly awarded to the County under Code of Civil Procedure section 1038. And this issue, in turn, depends upon whether, in order to be charged with defense costs under Code of Civil Procedure section 1038, a plaintiff must proceed without reasonable cause and in bad faith, or if the absence of one or the other of these two factors will suffice.
Code of Civil Procedure section 1038 in pertinent part provides: “In any civil proceeding under the California Tort Claims Act ․, the court, upon motion of the defendant or cross-defendant, shall, at the time of the granting of any summary judgment ․ dismissing the moving party other than the plaintiff, ․ determine whether or not the plaintiff ․ brought the proceeding with reasonable cause and in the good faith belief that there was a justifiable controversy under the facts and law which warranted the filing of the complaint․ If the court should determine that the proceeding was not brought in good faith and with reasonable cause, an additional issue shall be decided as to the defense costs reasonably and necessarily incurred by the party or parties opposing the proceeding, and the court shall render judgment in favor of that party in the amount of all reasonable and necessary defense costs, in addition to those costs normally awarded to the prevailing party․”
The County relies on Knight v. City of Capitola (1992) 4 Cal.App.4th 918, 6 Cal.Rptr.2d 874 (hereafter “Knight ”) to argue that a finding of either lack of probable cause or bad faith will support a request for costs under Code of Civil Procedure section 1038. And indeed, that case so states: “To avoid an order to pay defense costs under Code of Civil Procedure section 1038, a plaintiff must have filed and pursued the action in good faith and with reasonable cause. (Cf. Carroll v. State of California [ (1990) ] 217 Cal.App.3d  at pp. 140, 141, 265 Cal.Rptr. 753.) Thus a defendant who can meet the procedural criteria of Code of Civil Procedure section 1038 need only show either that the plaintiff did not act in good faith or that the plaintiff lacked reasonable cause for the action.” (Knight, supra, at pp. 931-932, 6 Cal.Rptr.2d 874, emphasis in original.)
We respectfully disagree with this conclusion. The court in Knight did not discuss the wording of Code of Civil Procedure section 1038 or the legislative intent in enacting the statute, nor did the court engage in any analysis of whether its conclusion, that a lack of either subjective good faith or objective reasonable cause would subject a plaintiff to defense costs, would further the policy goals behind the statute. Rather, the court simply stated its conclusion, citing Carroll v. State of California (hereafter “Carroll ”), supra, 217 Cal.App.3d at pp. 140, 141, 265 Cal.Rptr. 753. (Knight, supra, at pp. 931-932, 6 Cal.Rptr.2d 874.) We do not believe, however, that the cited case provides authority for the proposition pronounced.
The facts in Carroll are similar to those in Knight: the plaintiffs in both actions were injured on public property and sued three governmental entities, the city, county and state, for their injuries. In each case, the county and state informed the plaintiffs that they neither owned nor controlled the accident sites. In both cases, the plaintiffs did not oppose the governmental entities' summary judgment motions, effectively conceding that they lacked reasonable cause to pursue the actions against those defendants. In Carroll, the trial court awarded both the county and state their costs pursuant to Code of Civil Procedure section 1038, impliedly finding a lack of good faith and reasonable cause in plaintiffs' prosecution of the action against those defendants. In Knight, the trial court made an explicit finding that the action “was initiated and maintained in bad faith and without reasonable cause,” and awarded the county its defense costs.
The Carroll court was not concerned with whether Code of Civil Procedure section 1038 provided two separate bases for an award of defense costs, that is, bad faith or lack of reasonable cause. Rather, the parties in that case acknowledged “that the complaint must be filed and maintained against the County and State in ‘good faith and with reasonable cause.’ ” (Carroll, supra, at p. 140, 265 Cal.Rptr. 753.) The plaintiff in Carroll simply maintained that the evidence did not support a finding that the action was not filed and maintained in “good faith and with reasonable cause.” After reviewing that evidence, the Court of Appeal stated: “We find nothing in the record that even hints that Plaintiffs had any facts upon which to base a good faith belief or reasonable cause that either the County or the State ‘owned, managed, operated, maintained, controlled, leased, and supervised the intersection.’ ” (Id. at p. 143, 265 Cal.Rptr. 753.) Consequently, the court concluded: “We find that substantial evidence supports the trial courts' awards of costs and attorney's fees against Plaintiffs․ The action was not brought or maintained against these defendants in ‘good faith’ or with ‘reasonable cause.’ ” (Ibid.)
In short, Carroll cannot fairly be read to hold that lack of either good faith or reasonable cause will support an award of defense costs under Code of Civil Procedure section 1038. Consequently, we consider the Knight court's reliance on Carroll on this point misplaced.
The County also relies on Hall v. Regents of University of California (hereafter “Hall” ) (1996) 43 Cal.App.4th 1580, 51 Cal.Rptr.2d 387 in support of its position. There, plaintiff Hall sued the Regents for medical negligence on the part of the University of California at Davis Medical Center (“UCDMC”), alleging that UCDMC negligently delayed revealing that she had tested negative for the AIDS virus.3
Hall's only retained expert testified in deposition that UCDMC did not breach the standard of care by delaying two months in informing Hall that she was not infected with HIV. After the deposition, Hall's attorney remarked that the expert's testimony had “finished off” his case against UCDMC. However, he refused to dismiss the Regents. Rather, Hall's attorney chose to keep the Regents in the case through summary judgment, in order to benefit from the provisions of Code of Civil Procedure section 437c, subdivision (k).4 Hall did not oppose the Regents' summary judgment motion.
Following the grant of summary judgment, the Regents sought to recover their defense costs pursuant to Code of Civil Procedure section 1038. In its tentative ruling, the trial court found that the action had been maintained in subjective good faith, but without reasonable cause, and granted the motion as to costs incurred after the deposition of Hall's expert. The court reversed its ruling, however, after a hearing on the motion, having been persuaded by Hall's argument that she needed a finding of lack of fault on the part of UCDMC in order to avoid, by means of Code of Civil Procedure section 437c, subdivision (k), an “empty chair” argument by the remaining defendants.
The Court of Appeal reversed the trial court, concluding that “Hall's reasons for refusing to dismiss the Regents did not constitute reasonable cause within the meaning of section 1038.” (Hall, supra, 43 Cal.App.4th at p. 1583, 51 Cal.Rptr.2d 387.) With all due respect to the Hall court, we believe that Hall's argument that she should not be subject to defense costs because she had a good reason for keeping the Regents in the case went to the issue of her good faith, and not to the issue of reasonable cause.
Hall sued the Regents for medical malpractice. Once her expert opined that the Regents did not breach the standard of care, there no longer existed reasonable cause for Hall to maintain her lawsuit against the Regents. Consequently, the only question remaining was whether Hall could in good faith maintain her un meritorious lawsuit against the Regents in order to avoid an empty chair defense.
Hall opposed the Code of Civil Procedure section 1038 motion for defense costs based on her strategic reasons for refusing to dismiss the Regents prior to summary judgment. The issue presented to the court in Hall was, thus, whether a valid litigation strategy amounted to good faith for purposes of Code of Civil Procedure section 1038. As the Court of Appeal stated, the express wording of Code of Civil Procedure section 1038 directly links “good faith” to a belief in a “justifiable controversy under the facts and law․” (Hall, supra, at p. 1586, 51 Cal.Rptr.2d 387.) Because Hall's tactical concerns could not and did not create a justiciable controversy between Hall and the Regents, we fail to see how they could constitute the basis for a finding of good faith for purposes of Code of Civil Procedure section 1038. Rather, Hall's counsel conceded that, once Hall's expert opined that UCDMC did not breach the standard of case, Hall had no case against the Regents. Consequently, we agree with the Court of Appeal's conclusion that the Regents were entitled to their defense costs because the record established as a matter of law a lack of both good faith and reasonable cause.
In summary, in our view, all of the appellate cases in which defense costs have been awarded under Code of Civil Procedure section 1038 involved situations in which the plaintiff lacked both reasonable cause and good faith to pursue the action against the public entity. We are thus left with the question of whether a finding of lack of reasonable cause alone will support such an award.5 Thus, we turn to the statute to determine whether the trial court properly charged plaintiffs with defense costs in the absence of a finding that plaintiffs prosecuted the action in bad faith.
The plain words of the statute require the trial court to make two separate determinations: whether or not the plaintiff acted with reasonable cause and in good faith in prosecuting the lawsuit. This language suggests that a lack of both reasonable cause and good faith is a prerequisite to an award of Code of Civil Procedure section 1038 costs. However, the statute continues by providing that costs may be awarded “If the court should determine that the proceeding was not brought in good faith and with reasonable cause,․” This language suggests that the absence of either good faith or reasonable cause will support an award of costs. Since the statute can be read to support two differing conclusions, we turn to the accepted rules of statutory construction to aid us in interpreting the statute.
“We begin with the fundamental rule that we must ascertain the intent of the Legislature so that we may effectuate the purpose of the law. (Moyer v. Workmen's Comp. Appeals Bd. (1973) 10 Cal.3d 222, 230, 110 Cal.Rptr. 144, 514 P.2d 1224; Jackson v. City of San Diego (1981) 121 Cal.App.3d 579, 587, 175 Cal.Rptr. 395.) ‘When a statute is theoretically capable of more than one construction we are obliged to choose that which most comports with the intent of the Legislature.’ (Southern Cal. Gas Co. v. Public Utilities Com. (1979) 24 Cal.3d 653, 658, 156 Cal.Rptr. 733, 596 P.2d 1149; Moyer v. Workmen's Comp. Appeals Bd., supra, 10 Cal.3d at p. 232, 110 Cal.Rptr. 144, 514 P.2d 1224.) It is well settled that a statute is to be construed in such a way as to render it reasonable, fair and harmonious with its manifest legislative purposes and, therefore, the literal meaning of its words must give way to avoid harsh results and mischievous or absurd consequences. (County of San Diego v. Muniz (1978) 22 Cal.3d 29, 36, 148 Cal.Rptr. 584, 583 P.2d 109.)” (Curtis v. Los Angeles County (1985) 172 Cal.App.3d 1243, 1249, 218 Cal.Rptr. 772.)
The legislative history of Code of Civil Procedure section 1038 is of limited instructive value. Throughout the many documents and correspondence summarizing and describing the effect of the proposed legislation, the dual requirements of bad faith and lack of reasonable cause are consistently reiterated. For example, in a summary of Assembly Bill 3214, the Assembly Committee on the Judiciary describes the legislation as follows: “Authorizes a court to award reasonable and necessary attorney fees and court costs to defendants who have been sued without reasonable cause in cases where the court has found that the plaintiff did not bring the suit in good faith.” (Legislative Intent Service, Tab 4, p. AP-1.) In addition, initial opposition to the bill centered on the fact that “persons forced to defend frivolous lawsuits already have an opportunity for redress in a separate action for malicious prosecution.” (Id. at Tab 3, p. 3.) After the bill was amended to provide that a defendant who was awarded costs pursuant to Code of Civil Procedure section 1038 would be precluded from prosecuting a malicious prosecution action, opponents of the bill dropped their opposition. Perhaps the most telling document in the legislative history is the Enrolled Bill Report, which, in contemplation of the Governor's consideration of the legislation, summarized the effect of the bill as follows: “This bill provides that upon dismissal of an action against a governmental entity pursuant to the Tort Claims Act, the defendant may request the court to make an additional finding as to whether the plaintiff had reasonable cause to bring the action, and proceeded in good faith. If the court finds that the plaintiff lacked both reasonable cause and good faith, it must award the defendant governmental entity its defense costs, including attorney fees.” (Id. at Tab 13, p. PE-4, emphasis in original.) Thus, though not dispositive, the legislative history strongly suggests that a finding of both lack of reasonable cause and bad faith are prerequisites to a cost award under Code of Civil Procedure section 1038.
Case law also supports this reading of the Legislature's intent in enacting Code of Civil Procedure section 1038. The statute “ ‘provides public entities with a protective remedy for defending against un meritorious litigation’ (Curtis v. County of Los Angeles (1985) 172 Cal.App.3d 1243, 1247, 218 Cal.Rptr. 772) as a judicially approved alternative to a constitutionally proscribed action for malicious prosecution. [Citations.]” (Knight, supra, 4 Cal.App.4th at p. 931, 6 Cal.Rptr.2d 874.) Thus, “the case law on the tort of malicious prosecution is analogous, instructive and persuasive authority for the proper resolution of this appeal.” (Carroll, supra, 217 Cal.App.3d at pp. 141-142, 265 Cal.Rptr. 753.) As Justice Arabian noted in Curtis v. County of Los Angeles, supra, 172 Cal.App.3d 1243, 218 Cal.Rptr. 772, “The waiver provisions in subdivision (c) [‘any party requesting the relief pursuant to this section waives any right to seek damages for malicious prosecution’] show a recognition by the Legislature that the relief afforded by Code of Civil Procedure section 1038 is so similar to a malicious prosecution cause of action that an aggrieved party can only seek redress by one method or the other, but not both.” (Id. at p. 1250, 218 Cal.Rptr. 772.) “Inasmuch as the Legislature provided in subdivision (c) of Code of Civil Procedure section 1038 that a request for relief pursuant to the section operates as a waiver of a malicious prosecution action, we presume the Legislature intended that Code of Civil Procedure section 1038 would provide a means of redress for acts similar to those for which damages are sought in a civil malicious prosecution action.” (Id. at p. 1251, 218 Cal.Rptr. 772.)
In a cause of action for malicious prosecution, a plaintiff must establish “ ‘that the prior action (1) was commenced by or at the direction of the defendant and was pursued to a legal termination in his, plaintiff's, favor [citations]; (2) was brought without probable cause [citations]; and (3) was initiated with malice [citations].’ (Bertero v. National General Corp. (1974) 13 Cal.3d 43, 50, 118 Cal.Rptr. 184, 529 P.2d 608; Rest.2d Torts, §§ 653-681B.)” (Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 871-872, 254 Cal.Rptr. 336, 765 P.2d 498.) Thus, a successful action for malicious prosecution in California requires proof not only that the underlying action was brought without probable cause, but also that it was initiated or continued with malice. (Id. at p. 874, 254 Cal.Rptr. 336, 765 P.2d 498.) As our Supreme Court explained in Sheldon Appel v. Albert & Oliker, supra, the “probable cause” element of the malicious prosecution cause of action raises a question of law for resolution by the court by application of an objective standard: “whether any reasonable attorney would have thought the claim tenable.” (Id. at p. 886, 254 Cal.Rptr. 336, 765 P.2d 498.) The “malice” element, on the other hand, “relates to the subjective intent or purpose with which the defendant acted in initiating the prior action,” a determination for the factfinder. (Id. at p. 874, 254 Cal.Rptr. 336, 765 P.2d 498.) “If the court determines that there was probable cause to institute the prior action, the malicious prosecution action fails, whether or not there is evidence that the prior suit was maliciously motivated. [Citations.]” (Id. at p. 875, 254 Cal.Rptr. 336, 765 P.2d 498.) Of course, the converse should be equally obvious: In the absence of evidence of the defendant's malice in filing the prior action, the malicious prosecution action cannot succeed, whether or not the prior claim was legally tenable.
We do not believe that the Legislature intended, by enacting Code of Civil Procedure section 1038, to create a less onerous standard for the recovery of malicious prosecution damages, that is, defense costs,6 by public entities than is available to all other defendants in civil litigation. Indeed, being mindful of the fact that malicious prosecution is a disfavored cause of action (Sheldon Appel v. Albert & Oliker, supra, 47 Cal.3d at p. 872, 254 Cal.Rptr. 336, 765 P.2d 498), we are not convinced that the Legislature meant to eliminate one of the elements of the tort for a certain category of litigant. To the contrary, we conclude that Code of Civil Procedure section 1038 was intended to provide public entities with a mechanism for recovering malicious prosecution damages when claims brought without probable cause and without good faith are disposed of on summary judgment.
Because the trial court found only that plaintiffs prosecuted this lawsuit without probable cause and did not consider the issue of plaintiffs' bad faith in bringing and maintaining the action, we remand this matter to the trial court for further factual findings on that issue.
The judgment is affirmed, the award of costs is reversed, and the matter is remanded to the trial court for a ruling, consistent with this opinion, on the County's request for costs pursuant to Code of Civil Procedure section 1038. The County's motion for an award of monetary sanctions against plaintiffs for filing a frivolous appeal is denied. Plaintiffs are awarded their costs on appeal.
I concur in the judgment and all of my colleagues' opinion except the portion that imposes malice as the required mental state for the imposition of costs pursuant to Code of Civil Procedure section 1038. I do not believe that the express language of Code of Civil Procedure section 1038 nor its legislative history as accurately explicated by my colleagues requires the public entity prove an absence of probable cause and malice as distinguished from a proceeding “not brought in good faith․” Having said that, I am not certain there is a material difference between “malice” in the malicious prosecution context (Albertson v. Raboff (1956) 46 Cal.2d 375, 383, 295 P.2d 405; see United Professional Planning, Inc. v. Superior Court (1970) 9 Cal.App.3d 377, 388, 88 Cal.Rptr. 551) and a proceeding “not brought in good faith” within the meaning of Code of Civil Procedure section 1038. However, I would hold that the legislatively chosen words, a proceeding “not brought in good faith,” ought to be the test. Moreover, I do not believe the remedy contained in Code of Civil Procedure section 1038 ought to be categorized as “disfavored” in the absence of a more direct statement of such intent by the Legislature. Otherwise, I am wholeheartedly in complete agreement with my colleagues' well stated and precise analysis.
FN1. All further statutory references are to this code unless otherwise indicated.. FN1. All further statutory references are to this code unless otherwise indicated.
2. The County never maintained, and the trial court did not rule, that plaintiffs pursued the lawsuit in bad faith.
3. Hall had earlier tested positive for HIV. She also sued the medical group and laboratory which originally informed Hall that she was HIV-infected.
4. That section provides: “In actions which arise out of an injury to the person or to property, when a motion for summary judgment was granted on the basis that the defendant was without fault, no other defendant during trial, over plaintiff's objection, may attempt to attribute fault to or comment on the absence or involvement of the defendant who was granted the motion.” (Code Civ. Proc., § 437c, subd. (k).)
5. Contrary to the apparent holdings of Knight and Hall, we think it a novel proposition to say that a finding of bad faith alone will support an award of costs under Code of Civil Procedure section 1038. We know of no rule of law which would permit a court to sanction a party for filing a meritorious lawsuit based upon his or her subjective state of mind.
6. Because “a governmental entity's interest in protecting its reputation is minimal, and it is not capable of suffering emotional distress ․” (City of Long Beach v. Bozek (1982) 31 Cal.3d 527, 531, 183 Cal.Rptr. 86, 645 P.2d 137), a public entity's malicious prosecution damages would presumably be limited to the costs of defending the meritless lawsuit.
ARMSTRONG, Associate Justice.